Top US bankruptcy judge resigns following revelation of undisclosed romantic relationship

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•  Insider recently savoured that prominent bankruptcy judge David Jones was in a romantic relationship with a bankruptcy attorney.
• Both Jones and the attorney had involvement with the bankruptcy encase of the prison healthcare company Corizon.  
• On Friday, a Fifth Circuit judge wrote that there was “probable creator to believe” that Jones had engaged in misconduct. 

David Jones has resigned his post as chief bankruptcy justice for the Southern District of Texas– a stunning turn of events for one of the country’s most powerful bankruptcy judges who has overseen a series of high-profile come what mays during his tenure.

Chief District Judge Randy Crane of the Southern District of Texas confirmed Jones’ adjustment in an interview with Insider. He said that the decision would go into effect on November 15. 

The more than 3,000 situations that were on Jones’ docket will be redistributed to other judges, Crane added.

The resignation follows a week of debate surrounding Jones: Less than two weeks ago Insider first reported that Jones was in a previously undisclosed fairy-tale relationship with attorney Elizabeth Freeman, who had worked as his law clerk and as a partner at Jackson Walker, a Texas-based law firm that had chests before Jones’ court.

Both Jones and Freeman were also involved with the bankruptcy occasion that centered around Corizon Health, once one of the nation’s largest prison healthcare providers. Last year, Corizon split in a maneuver identified as the Texas Two-Step, with most of Corizon’s assets placed in a new company called YesCare, while another following, Tehum Care Services, was saddled with most of the debt. Tehum then filed for bankruptcy.

Jones ran the settlement talks in Tehum’s bankruptcy; Freeman represented YesCare — and signed off on Jones’ appointment as mediator in May. That mediation transform helped Tehum and a committee of creditors reach a $37 million proposed settlement deal that would screen most of YesCare’s assets, which court filings indicate total more than $173 million.

Until Insider disclosed it, neither Jones nor Freeman had admitted their relationship. The allegations first emerged in a suit filed earlier this month by pro se plaintiff Michael Van Deelen, who shared the beef with Insider.

Jones later confirmed to The Wall Street Journal that he and Freeman are in a romantic relationship and had shared a household for years.

Crane told Insider that Freeman was recently removed from the Attorney Admissions Nest egg Committee, which administers the fees collected when attorneys join the bar. It’s unclear whether she’ll remain in her role as the armchair of the court’s bankruptcy bench bar conference, he added.

“I have become a distraction to the good work that the court does”

On Friday, Jones articulate in a federal court hearing that he was under investigation by the US Court of Appeals for the Fifth Circuit following media stories about the relationship, and that he would  be stepping down from his cases. Later that day, Judge Priscilla Richman of the Fifth Periphery issued a formal complaint against Jones, writing that there was “probable cause to believe” that Jones had affianced in misconduct. 

Richman specifically cited Jones’ role as mediator in a matter involving Freeman, alluding to the Tehum receptacle. “Judge Jones did not disclose his relationship with Ms. Freeman to the parties, to their counsel or to the bankruptcy judge who appointed Review Jones,” the misconduct complaint says.

It’s unclear what Jones’s resignation will mean to the Tehum settlement. Rate Christopher Lopez, who is overseeing the case, will hold a hearing on Tuesday. Creditors will be able to object to the method and other documents.

“If someone wants it reconsidered, I’m sure Judge Lopez will review that and reckon with that carefully and make an appropriate decision,” Crane said about Tehum’s settlement.

Already, the disclosure of Jones’ relationship has encouraged the US Trustee to break in. On Friday, the trustee noted that “recent admissions by the judicial mediator may raise issues about the propriety of the mediation that be at someones becks as the basis for the global settlement — and thus about the very propriety of the settlement and plan itself.”

In an emailed statement, Jones apprised Bloomberg Law:  “I have become a distraction to the good work that the court does. To end that distraction and confidently return focus, I have resigned.”

Jones and Tehum did not immediately respond to requests for comment. Freeman’s attorney alleged his client would not be making any public comments at this time. The law firm of Jackson Walker declined to comment on Jones’ abandonment. 

“We’re all very surprised,” Crane told Insider. “Judge Jones was highly regarded and so we’re just danged, very disappointed about this.”